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"A View From Across The Pond" an Englishman's personal view of the week's news in the USA
- from Erithacus
As the first serious snow of this winter hit New York this morning (Saturday) and storms left several inches of snow throughout the US northeast with more on its way, there seems little cheer for the financial markets when they re-open next week. The Nasdaq recorded its worst year of its 29-year history, losing almost 40 percent of its value at the start of the year – in contrast to its record gain of 85 percent in 1999. The Dow Jones Industrial average was down 6.2 percent for the year; not as dramatic a loss as the Nasdaq but still its worst performance since 1981 when it lost 9.1 percent. Not all industry sectors have suffered, however, and previously "unfashionable" stocks have benefited as investors sought refuge in areas they hoped would prove successfully "defensive". Among those to have proved more popular have been tobacco, pharmaceuticals and utilities.
Although there is no suggestion from the majority of experts that the US economy is in recession, or likely to be, many economists are predicting growth for the next 12 months of around 1.8 percent in sharp contrast to the incredibly high level of 5.1 percent for this year. Analysts are predicting solid and steady rises of the Nasdaq during 2001, but the 5000 level many had predicted reaching this year now looks completely out of reach. It would be "pure insanity" to even think about it, commented Barry Hyman, chief investment strategist with Weatherly Securities, and added that the 4000 level is "a dream" although 3000 "is certainly achievable".
President-elect George W Bush said last week that one way to improve consumer confidence and encourage more spending "would be to let the people have some of their own money back." He added," "There are clear warning signs; warning signs which will require action in the halls of Congress." This tax cut, as proposed during his election campaign, would not start to take effect until 2002, and even if this was brought forward, serious doubts expressed by a number of economists centre around whether any tax cut could be passed and implemented quickly enough to help the economy. Some economists are saying that any recession would be so short-lived it would be over before the taxpayers had received any benefit from a tax cut, and the Federal Reserve Chairman, Alan Greenspan, is known not to favour tax cuts in this situation – preferring to use surpluses to reduce national debt. Bush supporters clearly hope that Greenspan will take a different view early next year as the economy does visibly slow down; he did say, last February when interests rates were being raised, "At the appropriate time, I'm very much strongly in favour of tax cuts". An opposition of views between the new administration and Greenspan could have unpleasant repercussions, both political and economic.
Meanwhile, some interesting local laws have been passed in various parts of the USA this year. A selection from California include: in Los Angeles County it is now a legal requirement for every new residential development to include a tree in the front yard; in Burbank it is now a requirement for every "adult business" to have a "buffer zone" of at least 1000 feet between its premises and any home or school; in Redondo Beach dog owners will be fined $78 if police are called twice in any 24-hour period because of the noise of the animal’s barking; in Rolling Hill any new tennis, squash or racquetball courts must provide space for adding stables and corral area.
Although all these new laws are doubtless based on good reason, might I be forgiven for wondering whether the mass of legislation now facing every citizen of every "civilised" country is really necessary? Are we all in danger of having every facet of our daily lives, our work, our homes, our living space, run either by central government or regional and local bureaucracy? Or is it just me - do I worry too much?
A happy and prosperous New Year to you all.
Dec 30th 2000
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